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Show Summary
In this episode of the Real Estate Pros Podcast, host Erika speaks with Craig Marquardo, VP of multifamily at VCS, about his journey into property management, the challenges and opportunities in the industry, innovative strategies for adding value to properties, and the importance of building strong relationships with property owners. Craig shares insights from his extensive experience and emphasizes the need for trust and communication in property management.
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Investor Fuel Show Transcript:
Craig Marquardo (00:00)
So there are lots of ways to add value. Sometimes it could be something as…You know,
I had a downtown building which had a lobby with a gym, but there was really no communal space. But there was one wall in front of the elevator that, you know, that everybody had to walk by. And it used to be where they would just throw packages from deliveries on the ground. So we built a little package.
Station and then we brought in a company who who normally does break rooms for companies and they set up this huge basically a 7-eleven wall on this of the building.
Erika (02:05)
Hey everyone, welcome to the Real Estate Pros Podcast. I’m your host Erika and today I’m excited to be chatting with Craig Marquardo. He is the VP of multifamily at VCS. Craig, I’m so glad to have you on the show today.Craig Marquardo (02:20)
Nice to meet you.Erika (02:22)
Yeah, nice meeting you too. you know, I want to dive in today, Craig, and, you know, share for our, you know, listeners to tell us more about your world. What was it like getting in to real estate? And, you know, what made you interested in the property management side?Craig Marquardo (02:40)
I was in other industries 30, 35 years ago. was in the movie business. I was in some other things and I had a friend of mine who was a leadPrinciple partner on an investment property that they bought and it was a two thousand unit property that had some mixed commercial with two thousand units and After a lot of discussion Decided that I managed the property for them And of course I’d never managed a property but I’ve run a lot of businesses and so I ran the property like a business and this is pre internet pre software pre systems pre all the things and So things were a little simpler and more complicated back then
And it was highly successful. We did, you know, incredible numbers. And eventually after a few years, sold the property and everybody moved on. And I thought that was the end of my management career. And then little by little through communication and relationships, had private owners, you know, have conversations. And I’m like, well, you know, I did do this one thing this one time. And they’re like, my God, they’d be really be helping me out. And then I started managing.
properties, know, multifamily properties for private owners and did that for a number of years. And then eventually I was in Scapoose, Oregon, and I had one property that I had had in my sort of back pocket that I’d run in the background for about 11 years. And there was a property for let’s just call it one of the big four management companies had across town. And I knew that they would have a hard time finding someone to be able to come out to this.
somewhat remote location to manage his property. And so I offered to manage it for them and they were thrilled and they said that’d be great. then so I managed mine, I managed theirs and then they gave me like four or five others. And from that point I had worked for all other management companies which was a much…
Different experience, of course, because now I’m working with high-level property management software. I’m working within large corporate structures. I’m working with theoretically large management teams, even though you’re only in communication with so many of them. And I was thoroughly disappointed. The mistakes that I saw the companies making, the let’s call it…
slight deception of how they would report things to the owners, the lack of personal relationships that they would develop with their owners, and the nickel and diming that they would charge that I thought was just, you know.
you know, unacceptable. then moving from one company to another over the years, know, different companies had different problems. Some people didn’t have problem X, but they had problem Y. And then all of them shared this issue. And so after, you know, a number of years of that, a couple of years ago, I was ready to start my own management company with someone I had worked with for years. And
Couple of weeks before we made the decision, I got a phone call ⁓ from VCS recruiting me, asking me if I’m interested. And I said politely, no, thank you. I think I turned it down four times. And then finally took a meeting and he basically offered me the opportunity to run my management company through VCS, which of course, you know, makes life easier when you don’t have to worry about all the…
you know, backend things. And my owner, is very small, his background is in commercial real estate and obviously mine’s multifamily and you know, together it’s a great team. also, in addition to all the commercial properties we manage, we also have things like marinas and you know, and other types of odd businesses. So we cover a bit of the spectrum. And then there’s also properties that have mixed commercial and
Residential that we split them. Okay, you’re taking the downtown, you know commercial client. I’ll handle everybody else And we’ve done a lot of growth in that time. We’ve you know taken on, know, dozens and dozens of properties during that time We’ve only lost one we lost two due to sales of you know, they sold the property and you know They’ve self-managed but only one genuine loss of a property and yet we’ve You know increased our portfolio
exponentially which has been fantastic and so the last I would say it’s honestly the first time in the last couple of years that I have felt like we didn’t have to make any excuses for our either the work that we had to turn in or for the way our company was treating the client and and that’s refreshing
Erika (07:55)
Yeah, absolutely. And you know how how satisfying it must be to know that you’re offering that that level of service there. Craig, tell us more about the the markets that that you’re operating in and what kind of challenges and opportunities you you see.Craig Marquardo (08:14)
Well, we’re on the West Coast, so we’re mostly Oregon, but we also handle Washington, California. We can handle Idaho and whatnot, although we don’t have properties there yet. And I mean, the challenges obviously, we’re just a couple of years out of COVID. So there are still lingering laws that are being changed on a routine basis. Plus, as a good example, in Portland, Oregon, you have federal law, you have state law, youof the county law and then you have the city that has its own restrictions and regulations on various things. And that’s not common. That wasn’t the case beforehand, not to the degree that it was before COVID. And now that’s starting to loosen up and things are getting a little more normal, but it’s been a lot more to keep track of, know, and some things are here to stay, some things are going back the way they were, you so it’s adapting to the new normal.
And as far as opportunities, we’re always looking to grow as a company, but one of the things that we’ve been involved in lately is that normally when an investor or a developer or a architect
is building a new building or designing a new building, management company is not thought of until it’s time for the lease up. And by then it’s too late for us to fix any of the mistakes that were made or the problems that were had. So we’ve been brought in on a couple of projects early on in the development phase. And, you know, there were a lot of mistakes that we found in the design plans. Where’s your, you know, maintenance garage? Where’s your leasing office? Where is your common areas? Where are your
amenities?
Why is this random parking lot extending out into nowhere? You know, why does this not have that? You know, all the all the little things. Why, you know, you can get more value where there’s more value. For example, should you have a laundry room or washer dryer in the unit? Should it be an up down unit or a side by side? Should it should that washer dryer be in a closet or should it have a larger laundry room to service and whatnot? We have this beautiful building here.
nearby that is fairly easy to rent. It’s gorgeous. It’s a newer build. The problem is the bedrooms are too small.
You can’t fit a king-size bed in the bedroom and most people, couples, whatever else have a king-size bed and I don’t know many couples who sleep on a full-size and a queen will fit but it makes it a little tight but the units are so beautiful they make it work anyway thankfully for us but that would have been part of my first conversation that your square footage in the bedroom is too small it’s going to make it unrentable or at least less rentable.
And really our job is, you among many other things is in that phase is to find all the obstacles to a yes from a renter, as well as finding the most value in the property.
Erika (11:36)
And you know what, you know, let’s say you’re in that situation where you’re dealing with this property and it’s too late. So how do you compensate? How do you add value? How do you draw people in?Craig Marquardo (11:51)
So there are lots of ways to add value. Sometimes it could be something as…You know, have a few properties that have unheated swimming pools. So maybe the conversation needs to be adding a heat heater to the pool. Although I’ve never met a, a, a property owner who, with a pool who wouldn’t love to just fill it in with dirt. cause they do tend to get expensive. but you could put a pool heater in, you could, you could add value and, and large ways like that. You can, you know, you could build things, playgrounds and whatever else, but there’s also small touches.
So for example, I had a downtown building which had a lobby with a gym, but there was really no communal space. But there was one wall in front of the elevator that, you know, that everybody had to walk by. And it used to be where they would just throw packages from deliveries on the ground. So we built a little package.
Station and then we brought in a company ⁓ who basic who normally does break rooms for companies and they set up this huge You know basically a 7-eleven wall on this of the
and we didn’t make any money from it It wasn’t designed to be a profit center But it was everything from drinks and sodas and sandwiches to you know
I don’t know, there was energy drinks and frozen.
meals and mac and cheese and candy bars and all the things and these were like 7-Eleven prices, they weren’t cheap. But I just put a 7-Eleven in your lobby. So we weren’t sure how well it was gonna work out. And then I think it was the second Monday. And the way it works is neat is because a tenant can pre-register, like put a card in and then use your fingerprint.
And so the fingerprint is attached to your card. So you walk up, you grab what you want, scan it, scan it with your fingerprint and go up to your apartment. By the second Monday, the shelves were empty.
And every week thereafter, the shelves kept emptying out and emptying out. I’m like, well, clearly it’s working. They’re enjoying it. And it was a small thing that we did. Again, we didn’t benefit directly from it, but it didn’t cost us anything to bring them in and we didn’t make anything from it. it also, but it contributed heavily to not only tenant happiness, but tenant retention also adds value to the building, which means that we can raise rents and things of that nature.
Because you know you don’t always have I mean when something’s already done
the space is accounted for. can’t just put a gym somewhere randomly if there wasn’t space for it in the first place. So using what you have is super important. And that’s also where community events come in handy. I preach this often where, depending on the size of your property, I’ve had properties where we’ll do giant community garage sales. I own an inflatable movie screen that I keep in my garage that I bring to properties and we do
outdoor movie nights. But there’s not always space for that at every property. The reason community events are important, more important than just for the obvious, I have tenants, we’ve done polls in the past, and almost two a tenant, they will all tell you that they love the community events. And then in parentheses, even though I never got to attend any of them because I was working.
but they love that their property had community events. It’s like living on the beach, even if you never really get to go to the beach. You love that it’s there if you wanted to. It’s like having a gym membership and you never quite make it to the gym, but it’s good to know I can go anytime I want. And what that does is it shows that you’ve given down, you know, and that.
goes a long way with tenants because often tenants view ownership and management as a one-sided relationship that we’re always taking. You know, we’re taking your rent, we’re enforcing rules, we’re making you do this and making it, and not a lot of giving back. And so those community events go a long way in evening out that relationship, at least psychologically for the tenant.
Erika (16:35)
Yeah, and ⁓ with all those successes, you know, leads me to ask, what is next on the horizon? You’re already accomplishing a lot there.Craig Marquardo (16:45)
I mean, growth is always the goal. Smart.measured growth, we’re one of the few management companies that will say no to a client, which never ever happens at any other management company. No one says no to business and it’s like, we’ll figure it out. And I mean, there’s a property in particular, I know this management company took over, think it’s been seven months, they still haven’t found a full-time manager for the property. They’re still just, you know, they’re winging it and it can be done, but it’s not effective management.
certainly not what the owner signed up for. So you know we’re looking to do measured growth and like I said with getting involved with some of the developers early on in builds it does it doesn’t necessarily open up a new
business because obviously they were going to hire somebody when it came time to lease up. But it does put us in a different perspective of, you know, of being experts in the field to be able to contribute in different ways other than just managing your property after it’s ready to lease up. So that’s been exciting. But overall, I mean, we’re just trying to become an example, you know, a positive example in the industry as opposed to becoming someone’s
tragic story of the management company that they got rid of because of all these problems. We’re trying to, you know, balance that out a little bit.
Erika (18:04)
Yeah, yeah, and with the service and innovation that you guys are bringing, that’s really exciting and to see where you’ll go next, Craig.Craig Marquardo (18:15)
Well,it really does matter about your approach. The relationships that you have with your owners.
is everything and oftentimes that relationship becomes very professional and cordial, which is nothing wrong with that. But my owners, have incredible relationships with many of them I’m friends friends with now when I didn’t know them at all before. And, you know, it’s not just that we talk about wives and kids when we talk kind of thing. It’s more that they appreciate being plain spoken to about their investment. They spent millions of dollars the last thing they
want to do is be gassed on when it comes to, everything’s doing great. No, they want to know exactly what’s happening and how we’re going to deal with the problem and what the solution is and how we work together. Because that is the nature of what makes what we do work so well is because if you as an investor and owner, you know, this is a partnership between you and I, you know, we are managing this property together. Yes, I’m doing the work, but you know, we have been applying your
your long-term or short-term goals. For example, somebody who’s gonna have a legacy property that they intend to give their grandchildren, I will manage entirely different than a property that we’re gonna flip in two years. And so the strategies are very different for both and the way you apply.
you know, everything from rent increases to renewals to, you know, to advertising, the type of expenses, the long-term investments, the capital improvements, you know, all that gets taken into account and those decisions get made along that basis. And then at the same time, I train my staff to look at their job a little differently from a different lens, as opposed to…
even though their title is property managers, I asked them what does that mean? And they go, we rent apartments and we do so. I’m like, okay. But really who you are is you’re managing someone else’s business. In fact, you are managing someone else’s investment. So you are more of a business manager or an investment manager. And if that’s the case, if you put that lens on, the decisions that you’ll make over the course of a year will vastly change and how you approach both financial and
financial problems and and owners appreciate that because that’s really what they’re trying to hire is you’re managing their investment that causes a panic for them it’s a little like you know trusting a babysitter to leave your children with you know you don’t just leave them with anybody and often like regular relationships if you’ve been burned enough by previous management companies or you know previous babysitters who let your kid run around in the rain
Then you’re gonna be super cautious, which means that the first you know months to years of my relationship with these owners is about earning and building their trust that we’re not gonna be like the other guy and and that’s a challenge, but I feel it’s a worthwhile endeavor or we wouldn’t be here
Erika (21:07)
Yeah, yeah. I, you know, Craig, I think that the effort that you put into this really shows. And because of that, I’m sure there’s someone out here that’s going to want to reach out, connect, learn more. And how can they reach you?Craig Marquardo (21:21)
You can go through our website which is VCS dash p.m. Dot com or you can email me at Craig at VCS dash p.m. Dot com and Yeah, I mean we’re we’re always looking for ⁓ for new relationships not just new businessErika (21:36)
Yeah, yeah, that’s excellent. Well, Craig, I appreciate your time, your story and your perspective. What you guys are doing at VCS is something to be proud of.Craig Marquardo (21:46)
Thank you so much.Erika (21:47)
And for our listeners here, if you got value from this episode, make sure that you’re subscribed to the Real Estate Pros podcast. We’ve got more conversations lined up with pros like Craig who are out there building fantastic real estate businesses. We’ll see you on the next
